Berkshire Hathaway

Just happened to read the outsiders 2 months back.
A rare book on iconoclast CEO-s (one to notice is Henry Singleton).
Emphasizes much on capital allocation as the single most important CEO task.

The Straits Times
www.straitstimes.com
Published on Mar 03, 2013
Buffett goes on newspaper buying spree

New York - Over the last half-century, Mr Warren Buffett has built a reputation as a contrarian investor, betting against the crowd to amass a fortune estimated at US$54 billion (S$68 billion).

He underscored that instinct in his annual letter to shareholders published last Friday. In a year when he did not make any large acquisitions, he bought dozens of newspapers - a business others have shunned.

His company, Berkshire Hathaway, has bought 28 dailies in the last 15 months for US$344 million.

"There is no substitute for a local newspaper that is doing its job," he wrote. "People will seek their news - what's important to them - from whatever sources provide the best combination of immediacy, ease of access, reliability, comprehensiveness and low cost."

The key will be in figuring out how to successfully charge for online content, he said.

"Papers delivering comprehensive and reliable information to tightly bound communities and having a sensible Internet strategy will remain viable for a long time," Mr Buffett wrote.

He cited The Wall Street Journal as having adopted a pay model early on for online content.

Success will not come from cutting news content or frequency of publication, he said, adding: "Indeed, skimpy news coverage will almost certainly lead to skimpy readership."

Mr Buffett, a long-time owner of The Buffalo News and a stakeholder in The Washington Post, has long proclaimed his love for newspapers but publicly swore off them in 2009, telling shareholders that he would not buy a newspaper at any price.

So his announcement last year at Berkshire's annual meeting that he was interested in buying small newspapers surprised many.

In an interview with The Daily Beast last year, he said he had faith in newspapers and thought they have a specific role to play in society and serve a valuable purpose.

There was profit potential and one reason was that buying newspapers had become less expensive.

The newspaper purchases are relatively minor deals for Berkshire, and just a small part of the giant conglomerate.

Mr Buffet's buying spree started in November 2011, with The Omaha World-Herald, his hometown paper, for a reported US$200 million. By last May, he bought out the chain of newspapers owned by Media General, except for The Tampa Tribune.

In recent months, he continued to express interest in buying more papers "at appropriate prices - and that means a very low multiple of current earnings".

A former paperboy and member of the Newspaper Association of America's carrier hall of fame, Mr Buffett devoted nearly three out of 24 pages of his annual report to newspapers.

Among local United States papers, Mr Buffett sees the Arkansas Democrat-Gazette, published by Mr Walter Hussman Jr, as a model for success in the digital age.

"Over the past decade, his paper has retained its circulation far better than any other large paper in the country," Mr Buffet wrote.

Mr Hussman's newspaper was quick to charge for stories online as the industry shifted to the Internet, he said.

New York Times, Bloomberg

It was stated in his latest letter why he still likes newspapers.

His points on newspaper are applicable to our local newspaper SPH

SPH will remain as a relevant local newspaper in Singapore.

(03-03-2013, 10:42 PM)CityFarmer Wrote: His points on newspaper are applicable to our local newspaper SPH

SPH will remain as a relevant local newspaper in Singapore.

ST is losing credibility.
I am reading in between his words.
He says that people want news & local newspapers are a way to do it. but in Singapore with the advent of local alternative new sites which give real news & not only approved news, there is a chance that ST may lose relevance. it is a good stock for medium term but i have my doubts in the long term. I feel today is a better newspaper as they news & commentaries are what people will identify with more closely rather than with ST. so i have my doubts on SPH. Mediacorp yes (may be), SPH no no no

(04-03-2013, 01:19 PM)viruskbs Wrote:

(03-03-2013, 10:42 PM)CityFarmer Wrote: His points on newspaper are applicable to our local newspaper SPH

SPH will remain as a relevant local newspaper in Singapore.

ST is losing credibility.
I am reading in between his words.
He says that people want news & local newspapers are a way to do it. but in Singapore with the advent of local alternative new sites which give real news & not only approved news, there is a chance that ST may lose relevance. it is a good stock for medium term but i have my doubts in the long term. I feel today is a better newspaper as they news & commentaries are what people will identify with more closely rather than with ST. so i have my doubts on SPH. Mediacorp yes (may be), SPH no no no

I assume you mean MediaCorp Press Ltd, which publishes the free newspaper, Today.

Fyi, SPH has 40% stake in MediaCorp Press Ltd.

I think this is a very important paragraph on newspaper:

"Berkshire’s cash earnings from its papers will almost certainly trend downward over time. Even a sensible
Internet strategy will not be able to prevent modest erosion. At our cost, however, I believe these papers will meet
or exceed our economic test for acquisitions. Results to date support that belief."

Wonder what's the valuation that he acquired his 28 newspaper for?

(04-03-2013, 03:36 PM)shanrui_91 Wrote: I think this is a very important paragraph on newspaper:

"Berkshire’s cash earnings from its papers will almost certainly trend downward over time. Even a sensible
Internet strategy will not be able to prevent modest erosion. At our cost, however, I believe these papers will meet
or exceed our economic test for acquisitions. Results to date support that belief."

Wonder what's the valuation that he acquired his 28 newspaper for?

I am interested to know its valuation too.

Stripping out invest-able fund, net cash/debt position, and properties up-to-date values (Paragon Mall, Clementi Mall and Seletar Mall), the SPH's media biz is valued as $2.28 with market price of $4.15

PBT of SPH's media biz is $335 mil i.e. $0.21, so the PE is around 11.

Is it value-for-money? IMO it is over-valued, that explain why i am fully divested.

(not vested)

Berkshire on the hunt for more Heinz-like deals: Buffet

CHARLOTTE (North Carolina) — Berkshire Hathaway is on the hunt for more deals similar to its planned purchase of HJ Heinz, Chief Executive Warren Buffett said in an interview yesterday.

Berkshire likes the ketchup maker’s business, the deal’s US$23 billion (S$29 billion) price and its partner in the transaction, private equity firm 3G Capital, Mr Buffett said. “We hope to own Heinz 100 years from now. If you own great brands and you take care of them, they’re terrific assets,” he said.

http://www.todayonline.com/business/berk...als-buffet

(04-03-2013, 02:46 PM)CityFarmer Wrote:

(04-03-2013, 01:19 PM)viruskbs Wrote:

(03-03-2013, 10:42 PM)CityFarmer Wrote: His points on newspaper are applicable to our local newspaper SPH

SPH will remain as a relevant local newspaper in Singapore.

ST is losing credibility.
I am reading in between his words.
He says that people want news & local newspapers are a way to do it. but in Singapore with the advent of local alternative new sites which give real news & not only approved news, there is a chance that ST may lose relevance. it is a good stock for medium term but i have my doubts in the long term. I feel today is a better newspaper as they news & commentaries are what people will identify with more closely rather than with ST. so i have my doubts on SPH. Mediacorp yes (may be), SPH no no no

I assume you mean MediaCorp Press Ltd, which publishes the free newspaper, Today.

Fyi, SPH has 40% stake in MediaCorp Press Ltd.

OK lah then its no for both.

---

there are no growth prospects for ST/SPH in Singapore. people are losing faith in it. It seems it earns more from classifieds & tender ads rather than anything else. I will consider it as a lame horse for the medium term & a dead one for the long term.
also with the proliferation of alternative news sites ST is not the first choice for people to look for local news. i would rather go to yahoo/TRS/Google news, etc.
I agree with what WB has said about local newspapers but I dont agree ST is the one he would be betting on.